Henry Boot limbers up for growth

The Sheffield-based group said a hiatus in UK housebuilding during the recession has led to pent-up demand, which it can help to satisfy with its greenfield landbank.

However, a sustained recovery remains distant, added the builder. It said housebuilding continued to trade at depressed levels over the past two years, and there is little sign of a substantial increase in activity next year.

Henry Boot pushes land through the planning system before selling it to housebuilders, also working on projects ranging from social housing to new hospital wings.

“I think we’ve got a stable, reasonable level of activity out there,” said finance director John Sutcliffe. “I don’t think the market is on its knees.”

Henry Boot said trading profits in the first six months of the year increased to £11m from £5.8m a year earlier, boosted by the sale of land in Buckingham for 700 homes.

Pre-tax profits edged up to £9.1m from £9m a year earlier. Revenues were up 21 per cent to £66.9m, thanks to increased land sales.

It has wiped out debt, ending June with net funds of £0.6m, compared with net debt of £11.4m a year earlier.

The 125-year-old company upped its interim dividend by 22 per cent to 1.65p per share.

Housebuilder Persimmon this week said that while the UK housing market remains stable, it will continue to be held back by lack of mortgage finance.

Persimmon expects to sell the same number of homes this year as in 2010.

Henry Boot echoed this, and said despite efforts to improve mortgage availability, deposits remain tough to obtain for many first-time buyers.

Figures from the Department for Communities and Local Government show annual housing completions in the UK stand at about 106,000, down about 40 per cent from their 176,000 peak in 2007.

“We cannot continue to build houses at the rate UK PLC is building houses at the moment,” said Mr Sutcliffe.

“We’re a nation where the suppliers of housing are building to order. Nobody out there is building on spec.

“People living in rented would like to buy a property, I’m absolutely convinced of that.”

Henry Boot’s land promotion business kept land holdings level at 8,055 acres. The value of its land portfolio slipped to £52.6m from £55m a year earlier.

But land sales of £23m compared with just £4m a year earlier, driving the group’s profits increase. Henry Boot said it won planning permission on almost 2,000 housing plots during the first half, and has planning applications for another 4,400 plots working through the system.

“We’ve taken our gearing down from getting on for £50m to where we are today with no debt in order to be in a position to benefit (from a recovery),” added Mr Sutcliffe.

The group said it is seeing a polarised market, with the London and South East market remaining “vibrant”, while much of the North remains “sluggish”, with the exception of “hotspots” such as Harrogate, York, Leeds, Edinburgh and Chester.

Its construction arm maintained “good” activity levels, and has secured 95 per cent of this year’s targeted revenues. However, Henry Boot expects margins to become more competitive as public sector cuts bite.

The division recently launched a renewable energy arm to tap into growing demand for small clean power schemes. Henry Boot is targeting annual revenues of £5m from the venture within a couple of years.